Published 04 April 2019
Unconscionable transaction — breach of fiduciary duty — unconscionable conduct — Nicholls v Jessup [1986] 1 NZLR 226 (CA) — Contractors Bonding Ltd v Snee [1992] 2 NZLR 157 — Bowkett v Action Finance Ltd [1992] 1 NZLR 449. The plaintiff claimed over $177,000 from the defendant by way of equitable compensation. She had made three advances of money to the defendant and alleged one transaction was an unconscionable bargain and two transactions were a breach of fiduciary duty; or in the alternative, all transactions amounted to unconscionable conduct. The matter came before the judge by way of formal proof as the defendant was "lying low to avoid service". The plaintiff submitted she had mental health issues and was emotionally and financially vulnerable due to the break down of her marriage and a long period of unemployment. The two parties entered into a relationship and the defendant used his knowledge of the plaintiff's vulnerabilities to convince her to give him money. Firstly, the defendant attempted to set up a business. When the business failed, he pressured her to reimburse the $5000 deposit he had paid. Next the defendant asked the plaintiff for $73,000 for equipment for another business opportunity. The plaintiff was told this money would be returned to her immediately but it was not. There was no evidence of purchase of equipment and the funds were never repaid. The third transaction occurred after the plaintiff transferred the defendant $111,000 which he promised to invest for her. He showed her alleged evidence of the purchase with a price tag of $100,000. The plaintiff trusted the defendant's knowledge of the industry and believed he had made the purchase at that price. In reality, it had only cost $5000. After draining the plaintiff's funds the defendant ended their relationship. He transferred the plaintiff $10,743 and the purchase, meaning the plaintiff was responsible for the purchase and all costs and fees in relation to it. She eventually sold the investment for $500. The Judge found in favour of the plaintiff on the alternative cause of action alleging unconscionable conduct. The plaintiff was under a disability (being her diagnosed mental illness), her illness impaired her ability to make decisions in her best interests, and the defendant was aware of her illness and used it to benefit himself in an unconscionable way. Therefore he should not retain the benefit he had obtained. Judgment was made for equitable compensation of $173,257 together with costs. Judgment Date: 20 June 2018.
This website explains many of the things you might want to know if you are coming to the Youth Court, or just wondering how the Youth Court works.
Visit website›Ministry of Justice website with information on family issues including about going to court, forms and other times when you may need help.
Visit website›For information about courts and tribunals, including going to court, finding a court & collection of fines and reparation.
Visit website›On this site you will find information about our Supreme Court, Court of Appeal and High Court including recent decisions, daily lists and news.
Visit website›